Your relationship with your significant other, or lack thereof, dictates a strong portion of your legal marital status. This is especially true, when we are talking about government programs, such as income tax, GST, and child tax benefit.
There are typically six marital status options available, depending on your circumstances:
- Common Law
The most obvious two of the bunch is single or married. These two are straight forward. Single means you live on your own, providing for household solely. Married is the exact opposite. You and your spouse both provide for the household, or one spouse looks after the other. A married status comes into effect on the date you were legally married. Divorced and widowed are also straight forward. A divorce status will come into effect based on the date stated on your divorce certificate, which is issued through the courts. Unfortunately, if you are widowed, this will be effective on the date the deceased spouse passed, also verified through the death certificate.
This leaves two martial status’s that can potentially fall into a grey area in terms of “when” they actually become a legal status change; common law and separated. The following lists four different criteria, that when any one is met, will render a common law marital status:
- You have been living in the same household as another person to whom you have a conjugal relationship with for at least twelve months. If the relationship has a few rough patches, this status will not change unless you lived apart for more than 90 days during the last twelve months.
- The person to whom you are living with is the parent of your child or children
- The person to whom you are living with has custody of your child and your child is depend solely on them for support.
Separated can fall under two categories; legally separated after a marriage or separated after a common law relationship. As part of the Canadian Divorce Act, you are required to live separate and apart for at least one year prior to obtaining a divorce through the courts. Depending on the circumstances, sometimes the courts will be involved in order to provide a separation agreement, at which point the separation date will be in effect based on the agreement rendered. A common-law separation, unless children are involved, is a little easier in terms of agreeing upon a separation date outside the courts, as assets etc. are viewed different then a matrimonial home. In both cases, however, a minimum of 90 days is required before a legal marital status change can be updated.
The Canada Revenue Agency uses your marital status to decide on whether your “household” qualifies for certain program, such as GST, child tax benefit, and certain income tax credits. The household income usually dictates the eligibility and monetary value of payments received under these plans. Your marital status can have a huge effect on whether you are, or were, entitled to participate in the above programs. Incorrect filing of a marital status can have major effect on your personal finances in a number of ways, depending on the circumstances.
Since GST is an income threshold-based program, any time the household income is understated or overstated, your elegibility to participate is affected and the amount you qualify for changes. Claiming single, when in fact you actually are common law, usually results in balances being paid out under this program to you which you were actually not entitled to receive. Claiming common-law, when separated, could cost you funds you are actually entitled to receive. Not properly notifying the CRA of marital status changes occurring during the year could also result in amounts being owed back to the CRA, or losing out on funds which are in fact owed to you!
The same can be said for the child tax benefit and income tax credits. Anytime a program uses a “household” income to dictate eligibility and payment amounts, extreme sensitivity to your marital status exists. One wrong filing, or inaccurately updating your status, can be costly.
Most of us know you can update your marital status when you file your tax return, however, many do not realize you can do so at any point during the year. Correct filing will allow any or all of the previously stated program to remain at the proper level and ensure you are receiving exactly what you are deserve. No one likes to be handed money only to receive a bill with interest down the road for repayment, or to realize they lost out on funds they really could have used as the year progressed. It is very important when your marital status changes that you keep the CRA in the loop and is actually quite simple to do so.
In order to update your status with the Canada Revenue Agency, you can select any one of the following ways to notify a change:
- log in to MyBenefits CRA or MyCRA on our mobile apps page
- select “Manage profile details” or “Personal information” then “Marital status”
- log in to My Account
- select “Personal information” then “Change my marital status”
- call the CRA at 1-800-387-1193
- fill out Form RC65, Marital Status Change, and send it to the CRA
This is actually one area the CRA makes this very easy for us to update. So next time you go to put a tick by your marital status, do a double take to ensure accuracy!!
~Natasha McDonald ~